Is Apple's declining stock cause for concern?

Some pundits are questioning why Apple's shares are on the decline as of late. The company's stock is about $315 per share, down from its 52-week high of nearly $365.

Apple's shares have been on the decline as of late, causing strong reactions from investors and pundits.

As of this writing, Apple's shares are trading at $314.65, down $5.61 on the day and more than $50 from the stock's 52-week high of $364.90. The company's stock decline has come at a time when the Dow Jones Industrial Average has also been slumping. In April, the Dow was above 12,810. As of this writing, it's at 12,072.25.

Earlier today, financial site SeekingAlpha dug into Apple's declining shares, saying that the company doesn't appear to be as insulated from industry- or market-wide factors as it was not long ago.

"In the past, Apple has been able to rise above and show strength even when the market and other tech stocks were dropping," SeekingAlpha contributor Roguemont wrote. "This no longer appears to be the case."

The contributor, who is an independent trader and investor, argued that Apple's decline might also be due to Steve Jobs' health issues. The Apple CEO is currently on a medical leave of absence for an indefinite amount of time, and so far, Apple has not commented on when he might be coming back--if at all.

CNN also mentioned Apple's stock issues, citing public messages from users of social site StockTwits who are concerned by the decline. One user said that Apple is now subject to the "law of large numbers," which limits a company's ability to indefinitely post huge gains in revenue and profit; eventually, growth slows.

However, Apple's growth has been nothing short of astounding over the last several quarters, even though it had already been posting big numbers in previous periods. During its fiscal second quarter ended March 26, Apple posted a profit of nearly $6 billion on revenue of $24.7 billion. The company's revenue and profit were up 83 percent and 95 percent year over year, respectively.

Looking ahead, Apple CFO Peter Oppenheimer said in April that the company expects its revenue to rise to $23 billion in the fiscal third quarter. Last year, it generated $15.7 billion in revenue during the period.

So, why are Apple's shares slumping?

It's tough to say. But aside from Steve Jobs' health and Apple's growth, Piper Jaffray senior research analyst Gene Munster said in a phone conversation with CNET today that it might also have to do with investor concerns over the recent announcement that the company's retail boss, Ron Johnson, is leaving Apple to become president and CEO of J.C. Penney.

Even so, Munster said, "we think Apple is in as good a shape as ever," indicating that there is no single, good reason for the decline.

It's also worth noting that the concerns over Apple's shares might be premature. The company's stock price is undoubtedly lower than it has been as of late, but over the last 52-week period, its lowest share price was $235.56. Moreover, during the last year, the company's shares have jumped 15 percent.

Apple did not immediately respond to a request for comment on its share price.

 

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